• In an established downtrend, day-one is a red candle with a shaven bottom.

• The second day is a blue hammer or doji with a long upper lower shadow.

The essential element of this pattern a series of candles that all share the same low. This could be the two days in the examples above, or a number of days that are not consecutive.

After a protracted bearish move, this may provide a weak reversal signal, but most traders will look for additional confirmation of a reversal.

More useful is how this pattern creates an important resistance level. In any market, trending or ranging, this pattern establishes a support level by sharing the same low prices. Support Levels are simply price ranges that markets have trouble breaking below. Thus the low price these candles all share creates a clear benchmark for the market.